The first thing we need to clarify is that home and contents insurance are actually two separate policies that combine the features of both.
Home insurance covers financial losses associated with damage to or loss of the building itself, and may also be referred to as ‘Building insurance’.
Contents insurance covers financial losses caused by the theft, loss or damage of your possessions within the home.
So now that we’ve cleared that up, let’s get into the detail.
Choosing the right home and/or contents insurance can help prepare you for the unexpected, but understanding exactly what is and is not covered is crucial if you want to protect your most precious asset – your home.
The first thing you need to consider for your home insurance is whether you want ‘total replacement’ cover – which covers the cost of rebuilding your home exactly as it was, or ‘sum-insured’ cover – the most common type of home insurance which covers your home (building) up to a set amount.
Always shop around for the right level of cover to suit your individual needs, and where possible use comparison tools and calculators available to help you make an informed decision. We recommend trying a few online calculators as the results can vary from company to company. Generally, the more questions asked by the calculator, the more accurate answer you will get to know how much to insure for.
With your contents insurance, it’s a good idea to go through each room in your home and look at all of the items you have, and then work out what the approximate value is of each item. A good tip to remember when you’re doing this is to make sure you open your cupboards and think about things like the food in the pantry or the clothes in your wardrobe – all these items could add up to quite a bit.
It is important to understand that each insurance policy is different and the finer details should be thoroughly examined with your circumstances in mind; but there's also a generally accepted ‘level of cover’ that all home and content insurance policies cover. These include:
If you ever need to rebuild from scratch then you are not only paying for the costs of labour and materials, you will also be facing a range of ‘supplementary’ costs which may include but not limited to:
You will need to discuss these ‘supplementary costs’ with your individual insurer and make sure you are understand exactly what you are and are not covered for.
Known as ‘Optional Extras’ – most home and contents insurance policies include these, and it is up to you to determine exactly what is and isn’t considered optional.
Discuss your individual needs with your insurer and read all relevant documentation to ensure your cover is right for you. For example, you may want to include Motor Burnout or pay extra for accidental damage. Most insurancers provide limited ‘accidental damage’ cover, this is something to discuss with your insurer to determine exactly what is and what isn’t covered under their policy.
There are often benefit limits on what you can claim. Often this relates to cash and high valuables where you can claim up to a fixed limit. If you own a $25,000 diamond ring for example, you may want to speak with your insurer about additional and potentially specified term cover.
Other exclusions include (but are not limited to):
Again we strongly recommend that you speak with your individual insurer and read through your policy documents to ensure what you are and are not covered for.